Monthly Archives: August 2016

Avoid Average Investor Sink Holes

InvestorSinkHoles

By: Bill Moist, MS, CPA

Introduction…Misinformation is the worst enemy of those planning for retirement.  Here are three critical items you have not been told before by the news media.

  1. Here is a shocking report according to Dalbar Research- the company that researches the Mutual Fund industry. The average annualized returns over the last 20 years:
  • The stock market has increased 4.9%
  • Junk bonds 8%
  • The average investor (asset allocation model) annualized 2.1%
  • Inflation averaged 2.2%
  1. How did the most left leaning election 4 years ago affect the market?
  • Dow then 14,000
  • Now 18,400 (a 31% increase)

Job growth

  • Before the great recession 140 million jobs
  • Now 150 million jobs
  • Now 5.5 million jobs unfilled and many of these are good jobs.

Not arguing for a left leaning government, but those changes

tend to be longer term.  In comparison, we are still less left

leaning than Europe or Asia.  U.S. investing has become a

safe haven for foreign investors.  Recommendation…Avoid

making financial decisions solely on election returns as it’s

not intuitive.

  1. The best asset classes 15 year returns in order:

Click here to watch the video  Avoid Average Investor Sink Holes.

Real estate investment trusts (with self-storage REIT at the very top of the list)

  1. Emerging market equity
  2. High yield bonds
  3. Small cap
  4. Large cap
  5. Asset allocation funds- what average investor uses

Conclusion…These rankings change with the time being calculated.  But, real estate has been the top performer for 20 years. And Self-storage REITs have been the best segment in that class.

Take action now… You owe to yourself to find out how one of the Forbes 400 built his fortune on self-storage.  To discover what he knows, click here to “Get Little Known Secrets For Steady Income” FREE.  At self-storageinsider.com

Reference:  Networth Radio Show, Spenser McCown Group, August 26, 2016

This is Bill Moist, MS, CPA speaking Avoid Average Investor Sink Holes

Announcing Better Investment Design

Announcing Better Investment Design

What if?…There was a better way to design our investments.

In real estate, we increase our return on cash invested with the use of leverage.  And as long as the project yields are greater that our note payments we are making money.  Often we can try to improve our return by increasing our capital costs  which often increases our equity requirements.

Is there a better design?…When we calculate our return on investment (ROI), the greater our investment (denominator)  has to be (numerator) has to be to get the same return.  So, if we can reduce our investment and keep the same return, our ROI increases dramatically.

New self-storage program…This new program has been perfected in other areas of the country.  Now, we are bringing it to Texas and the surrounding states where self-storage investments are already high performers and expensive to buy, but very profitable to sell.

With rents and occupancy high it is a good time to build.  Here are the benefits of this new building system to owners:

  1. New building system is very inexpensive to build
  2. Can be easily built in stages as lease up takes place
  3. Time to build is weeks rather than months
  4. Units are secure
  5. Hurricane resistant

Target market…The target market for this new building system will be boat and recreational vehicle storage.  One in 12 vehicle-owning households now owns an RV.  That’s 8.2 million households in the U.S.

And as for recreational boating, more than 11.9 million vessels are registered in the U.S.

Between recreational vehicles and boats, 20 million need storage somewhere.

Providing storage for just a small portion of the 20 million boats and RV’s is a target rich market.  If someone has $20,000, $50,000 or $500,000 invested in a boar or RV, the owner is very unlikely to let that property be sold at auction to pay the monthly rent.

Click here to watch the video Announcing Better Investment Design.

In summary…When you add a more inexpensive way to build the storage facility,  we have an opportunity for a high return on investment that meets the needs of 20 milion Amercian families.

What’s next?  If you have not done so, Click here Optin to “Get 9 Little Known Secrets For Steady Real Estate Income.”

Posted by: Bill Moist, MS, CPA, Self-Storage Buyer

Self-Storage’s Appeal Defy Experts

Self-Storage w Brick

Self-storage assets lack the architectural themes and fine details that produce trophy properties in the office and retail sectors. No gleaming lobbies or guest amenities like the hotel sector. Yet investors have recognized other virtues in the self-storage asset class and driven capitalization rates (the annual return on the purchase price) down by 2.75 percent in recent years, a pace of almost .05 percent per quarter, according to a recent assessment from real estate services firm CBRE.

Now however, capitalization rate compression in the sector is slowing down. After the close of the first quarter of 2016, the average cap rate on transactions was 5.70 percent, a change of .04 percent. True enough, the drop in capitalization rates has slowed, but rates are still moving in a direction that is benefitting investors and owners.

“People love storage,” says Chris Sonne, executive vice president and national self-storage valuation group leader in CBRE’s valuation and advisory services division. “While there wasn’t a lot of activity in any sector in terms of transaction volume, when you compare that to declines in other asset classes, like office, self-storage was impacted the least.”

Strongest Annual ROI...Self-storage has the strongest average annual ROI performance, around 18.0 percent, of any equity REIT sector between 1994 and 2014, according to NAREIT.

Trade areas for self-storage units are about three miles, according to Sonne. In 2010, analysts took note of the revenue models for the properties, and noted an unexpected and stunning benefit. If, for instance, a self-storage property has 500 units, the owner of that facility might raise rents by $5 in a lease’s fifth month. Tenants do continue to pay. In month 10, the rent might go up another $5 or even $10, and tenants still continue to make payments on the unit.

“You can raise rents without losing occupancy,” Sonne says.

In conclusion…“The sector is as close to a recession-resistant property class as there is,” says Arlen Nordhagen, CEO of National Storage Affiliates Trust, a Greenwood, Village, Colo.-based REIT. This advantage over other asset classes and the low management requirement has contributed to the massive influx of capital into self-storage acquisitions and development.

rsz_1rsz_6500_bill_moist_professional_headshots_6_16_16e

Posted by: Bill Moist, MS, CPA, Self-Storage Buyer

Investors Lock In Solid Returns…Today’s Opportunity

selfstroageorange

 This Nich product, Self-Storage… fills up.

Interest in self-storage… has skyrocketed during the last decade. This niche property’s stable returns and growing demand are drawing attention from an array of new investors, particularly large institutions seeking to diversify their portfolios. These new players are increasing transaction volume at a record-setting pace. In a recent joint venture, Extra Space Storage and Prudential Real Estate Investors bought Storage USA’s 458 facilities for $2.3 billion from GE Commercial Finance. This deal clearly demonstrates that the self-storage asset class has arrived.

Strong market fundamentals further support the sector’s growing presence. The United States has approximately 54,000 self-storage facilities totaling 2.63 billion square feet with a market value of about $120 billion. Public ownership of self-storage currently hovers around 13 percent, which is higher than that of apartment, office, and warehouse sectors. Extra Space Storage of Salt Lake City and U-Store-It of Cleveland both completed public offerings last year, joining existing self-storage real estate investment trusts Public Storage, Shurgard Storage Centers, and Sovran Self Storage. Other companies quickly are following suit by acquiring and developing properties with the intention of forming new REITs. These companies are fueling a consolidation trend that slowly is changing the self-storage market landscape.

Today’s opportunity…Public ownership of self-storage is currently only 13%.  That means 87% of the storage in America is in private hands.  In fact, a large portion of the ownership is what we call mom and pops.  What that means is someone had a tract of land that they built a self-storage building.  It leased up and they built a second and then a third.  We are looking for that mom and pop where we can bring significant technology and marketing upgrades to the property.  This increases both rents and value.

What’s next?  If you have not done so, Optin to “Get 9 Little Known Secrets For Steady Real Estate Income” at www.self-storageinsider.com

Texas Real Estate Opportunity Now

Texas Commerical Real Estate Opportunities Now

Texas faired better than most states…Since the 2008 captial markets implosion, Texas has been a favored state for commercial real estate. The Texas population growth from all sources starting July 1, 2014, to July 1, 2015 was an amazing 460,000 people.  The population of Texas could double by 2050, says a new report released by the Office of the State Demographer.

Texas is now the 12 largest economy in the world and produced 17.8% of U.S. Exports in 2014.

So, with all that population growth, commercial real estate of all types are in high demand.  But, where can the local investor compete with all the Wall Street money coming to Texas?

We believe that we’ve found one area where the big money is not looking.  That is in the secondary self-storage market.  In fact, 87% of all self-storage properties are owned by mom and pop operations in these secondary markets.

The biggest opportunity today is in what we call value-add properties.  These mom and pop operations are typically the only or main source of income so little money is put back into capital improvements or technology.  Some don’t even have a marketing website or modern management software in place.  And many don’t have fences, security gates and cameras.

These capital improvements are generally not that expensive, however the resulting increase in occupancy and/or rental rates can be significant.

In conclusion...We are purchasing those self-storage properties where some capital improvements can make a significant increase in occupancy, rental rates, and ultimately resale value.

For more information: Get 9 Little Known Secrets For Steady Real Estate Incom…FREE at Self-StorageInsider.com  This is Bill Moist, DHL, MS, CPA discussing Texas Real Estate Opportunity Now.